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09 May 2014
As a reaction to the volatility of the rupiah over the past year, Bank Indonesia has issued a new regulation on hedging transactions. The Regulation on Bank Hedging Transactions (15/8/PBI/2013), enacted in October 2013, is expected to encourage the use of derivatives as a tool to hedge foreign currency exposure, and subsequently to reduce foreign currency spot transactions and ease pressure on the rupiah.
The following provisions are of particular note:
The regulation affirms the permission given to state-owned entities to enter into hedging transactions, as provided in the Ministry of State-Owned Companies Regulation PER-09/MBU/2013 (September 25 2013).
Through this regulation, it is hoped that the volatility of the rupiah can be reduced and the role of the domestic foreign exchange market in stabilising the rupiah exchange can be increased.
For further information on this topic please contact Elsie Hakim at Ali Budiardjo, Nugroho, Reksodiputro by telephone (+62 21 250 5125), fax (+62 21 250 5121) or email (email@example.com). The Ali Budiardjo, Nugroho, Reksodiputro website can be accessed at www.abnrlaw.com.
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Elsie F Hakim